Latest Jobs Report Hides Real Labor Crisis

The October 5 employment report from the Bureauof Labor Statistics (BLS) shows114K new jobs in September and adrop in the rate of unemployment from 8.1% to 7.8%. As 114K new jobs arenot sufficient to stay even with population growth,the drop in the unemployment rate is the result of not counting discouraged workers who are definedaway as “not in the labor force.”

According to the BLS, “In September, 2.5Mpersons were marginally attached to the laborforce.” These individuals “wanted and were available for work,” but “they were not counted as unemployedbecause they had not searched for workin the four weeks preceding the survey.”

In other words, 2.5M unemployed Americans were not counted as unemployed.

A truer picture of the dire employment situation is provided by the 600K rise over the previousmonth in involuntary part-time workers. According to the BLS, “These individuals were workingpart time because their hours had been cut backor because they were unable to find a full-time job.”

Turning to the 114K new jobs, once again thejobs are concentrated in lowly paid domestic servicejobs that cannot be off-shored. Manufacturing jobs declined by 16K.

As has been the case for a decade, two categories—healthcare and social assistance (primarilyambulatory healthcare services) and waitresses andbartenders account for 53% of the new jobs. The BLS never ceases to find ever-growing employmentof people in restaurants and bars despite therising dependence of the U.S. population on foodstamps. The elderly are rising as a percentage of theAmerican population, but I sometimes wonder if employment in ambulatory healthcare services isrising faster than the elderly population. Whetherthese reported jobs are real, I do not know.

The rest of the new jobs were accounted for by retail trade, transportation and warehousing, financialactivities (primarily credit inter-mediation), professional and business services (primarily administrativeand waste services) and state governmenteducation, where the 13,600 reported new jobs seem odd in light of the teacher layoffs andrise in classroom size.

The high-tech jobs that economists promised would be our reward for off-shoring Americanmanufacturing jobs and tradeable professionalservices, such as software engineering and intellectual technology, have never materialized. “Thenew economy” was just another hoax, like “Iraqi weapons of mass destruction” and “Iranian nukes.”

While employment falters, the consumer priceindex in August increased 0.6%, the largestsince June 2009. If the August rate is annualized, it means bad news on the inflation front. Instead ofbringing us high tech jobs, is “the new economy”bringing back the stagflation of the late 1970s? Time will tell.

——Paul Craig Roberts is a former assistant undersecretary of the U.S. Treasuryand former associate editor of The Wall Street Journal. He is the author of many books including The Tyranny of Good Intentions, Alienation and the SovietEconomy, How the Economy Was Lost and others.